Using a model without conflicts of interest and with identical information available to equity analysts, we show that bias and herding in their stock recommendations occur due to incentives provided by relative performance evaluation and top awards. Furthermore, these incentives also lead to...

Top sportsmen often refer to competition against other top sportsmen as a motivation to exert more effort. We examine whether a similar pattern exists among another group of top professionals – star analysts. Our evidence suggests that star analysts concentrate their efforts and generate...

In this paper we investigate the negative relationship between analysts' coverage and stocks idiosyncratic volatility. While prior research argues that analysts cause the low level of idiosyncratic risk because they lack access to firm-specific information we hypothesize that the causal relation...

In this paper we investigate the endogeneity of analysts' coverage decision. Specifically we argue that due to reputational concerns analysts avoid covering stocks with high levels of specific risk. Using three novel quasi-natural experiments we show that analysts' coverage drops after an...